Hunter to benefit if mining tax scrapped: industry

The Association of Mining and Exploration Companies (AMEC) says investor confidence in the Hunter will be buoyed if a major mining tax is culled.

The Federal Government has vowed to repeal the Minerals Resource Rent Tax (MRRT) and a senate inquiry into the matter is underway.

The inquiry is expected to hand down its report early next month.

AMEC says the levy is ill-conceived and poorly designed, costing companies an estimated millions of dollars in set-up fees as well as administration and compliance charges.

CEO Simon Bennison says the introduction of draft legislation to repeal the tax is a significant step to restoring confidence in the Hunter's resource sector.

"Xstrata at the moment is burdened with a number of taxes that are not making investment attraction anywhere near what it could be," he said.

"And I think the government's policy, not only to get rid of the MRRT, but also the carbon tax, is a clear indication that the tax policy structure at the moment that we're enduring in the resource centre is inappropriate."

AMEC says the tax has ruined Australia's reputation as a safe place to invest.

Mr Bennison says the Hunter's resource sector will become more attractive to investors if the levy's axed.

"The employment, the service industry that supports the coal sector and certainly those that are based in the Hunter region, but it's well beyond that, are critically important, not only the NSW economy but the Australian economy as a whole, " he said.

"And the last thing you want to be doing is undermining that economic base and it's critically important that we encourage resource development particularly coal mining in that region."